Self-proclaimed political outsider Donald Trump was chosen as the nation’s next president on Tuesday, defeating Washington veteran Hillary Clinton in a fiercely fought election that has wide-ranging implications for the nation’s economy and retail industry priorities from tax reform to transportation infrastructure and international trade.
“With the holiday season upon us, retailers are glad that this unprecedented election is over, along with the divisive rhetoric and the impact it had on consumers concerned about their future,” NRF President and CEO Matthew Shay said.
“The next few months will offer many opportunities for us to educate lawmakers on our priorities,” Shay said, citing tax reform and infrastructure improvement and pro-growth policies that create jobs and reward investment. “If this election taught us anything, it is the importance of focusing on policies and programs that not only benefit today’s economy but the economy of the future.”
“As President Trump begins staffing his administration, we are hopeful that pragmatism will prevail over ideology so that all branches of government can work together,” Shay said. Despite polls showing Clinton as the favorite going into Election Day, Trump won 279 electoral votes to her 218, and Clinton conceded early this morning.
Trump, a real estate developer turned reality TV show host turned politician, said he would draw on his experience in the private sector in setting the nation’s economic policy over the next four years. “I’ve spent my entire life in business, looking at the untapped potential in projects and in people,” Trump told supporters at his victory rally in New York. “We have a great economic plan. We will double our growth and have the strongest economy anywhere in the world.”
Democrats picked up some seats in Congress but not enough to take control of either chamber from Republicans, giving Trump an easier path for legislative initiatives than Clinton would have faced under a continuation of the divided government that has made legislative progress difficult for most major issues in recent years. As of this morning, Republicans held a 51-47 majority in the Senate, which Democrats had hoped to take, and 236-191 in the House, which had never appeared likely to flip.
Amid the most contentious White House race in recent U.S. history, close to half of consumers told NRF in a survey last month that they were being more cautious in their holiday spending because of uncertainty over the election outcome. But with the election settled — and television airtime previously consumed by political ads now freed up for retailers’ holiday advertising — shoppers are expected to pull themselves out of the election doldrums and retailers will likely see a rush of customers in the coming weeks.
With so much at stake, NRF took an active role in the political process early on, running television ads that highlighted retail career opportunities and co-hosting telephone forums where retailers were able to directly question candidates during the primary season. While NRF does not endorse presidential candidates, NRF’s RetailPAC contributed more than $385,000 to congressional races during the 2016 election cycle, supporting 113 House and Senate candidates on this week’s ballot. Initial results show that more than 90 percent of those we supported won.
The election results will affect a number of issues facing retailers:
Infrastructure – Trump pledged in his victory speech to rebuild highways, bridges, tunnels and airports, promising to give the nation a transportation infrastructure that is “second to none” and to “put millions of people to work as we rebuild it.” With crumbling infrastructure creating a bottleneck for retail supply chains, NRF has sought improvements for years, but will insist that legislation include a multimodal national freight policy to smooth the movement of retail cargo from ships to trains to trucks.
Tax Reform – Trump is likely to support efforts to “broaden the base” by eliminating tax credits and deductions that benefit only a few industries and using the revenue that would be saved to lower rates for all businesses. That’s the approach long supported by NRF because retailers receive few tax breaks and pay among the highest effective tax rates of any industry, but details of Trump’s plan remain to be seen. Trump has proposed lowering the current corporate tax rate from 35 percent to 15 percent, and has shown interest in accepting much of the tax reform plan proposed by House Speaker Paul Ryan, R-Wis., and Ways and Means Committee Chairman Kevin Brady, R-Texas. It is unclear where he would be on a provision of that plan that would deny the ability of retailers and others to deduct the cost of imports. Most trade experts say eliminating the deduction would be a violation of trade agreements. In addition, an infrastructure program of any size would have to be paid for, which would have significant tax implications. One possibility, as proposed by Clinton, would use repatriation of foreign earnings by U.S. firms that operate abroad to pay for an infrastructure plan. But repatriation has also been seen as an important element of comprehensive tax reform, and billions of dollars in revenue used on infrastructure would be money that could not be used to lower tax rates. One possible answer would be a large-scale combination of infrastructure improvement, stimulus and tax reform.
Trade – Trump adamantly opposes the Trans-Pacific Partnership, a free trade agreement supported by NRF that would eliminate virtually all of the $6 billion in annual tariffs on goods from member countries and boost U.S. spending power by more than $1,000 per household. He also wants to impose “huge” tariffs on imports from China and tear up the North American Free Trade Agreement, which lets U.S. factories easily obtain parts from Canada and Mexico and just as easily ship finished products back. NRF strongly opposes new tariffs and supports TPP and other free trade agreements because retailers rely heavily on imported merchandise.
Immigration – Immigration was one of the hottest issues of the election campaign, with Trump vowing to build a wall between the United States and Mexico. With increased pressure to secure the nation’s borders, NRF is concerned that the government not create unreasonable burdens for employers in their role in verifying the immigration or citizenship status of workers.
Labor Issues – Labor policy during the Obama administration was focused largely on making union organizing easier, as seen by Labor Department and National Labor Relations Board positions on ambush elections, micro-unions, joint employer status and the use of outside legal counsel or consultants to counter unionization efforts. Under a Republican administration and Congress, NRF will seek more constructive opportunities for engagement with the employer community that help employees and employers work together for mutual benefit. While Clinton supported raising the federal minimum wage from its current $7.25 per hour to $12, prospects for passage now seem far less likely. NRF believes such a large increase would slow job creation. NRF wants policymakers to recognize that the minimum wage is a “starting wage” earned only temporarily by most workers as they gain experience and skills that let them move up to higher-paying positions
Health Care – Trump supports congressional Republicans’ efforts to “repeal and replace” the Affordable Care Act, which until now have been blocked by the Obama White House. NRF opposed passage of the ACA, particularly its requirement for employers to provide health insurance for workers at government-mandated levels, but has focused more recently on reforming the legislation and helping retailers with compliance. Trump also supports allowing health insurance to be purchased across state lines, would allow consumers to buy prescription drugs from other countries and wants Medicare to negotiate with pharmaceutical companies over prescription drug prices.
Online Sales Tax – Trump has not taken a position on NRF-backed legislation that would allow states to require online sellers to collect sales tax the same as local retailers. But Democrats have been more supportive on the issue, so GOP control of both the White House and Congress means the long-stalled issue is likely to remain at status quo.
Patents – While Clinton voiced support for efforts to rein in frivolous lawsuits brought by patent trolls against retailers, including steps backed by NRF such as requiring that letters demanding payment for alleged infringement be more specific in their claims, Trump has not taken a position. Regardless of who won, patent holders including pharmaceutical and manufacturing companies are expected to seek the elimination of procedures such as “inter partes review,” a process that allows questionable patents to be challenged administratively at the U.S. Patent and Trademark Office rather than going to court. That process has helped weed out weak patents exploited by trolls, and NRF hopes that whoever Trump chooses as his director of the patent office will support its continuation.
Payments – With Republicans in control of both ends of Pennsylvania Avenue, prospects are improved for passage of the Financial CHOICE Act, which would effectively roll back parts of the Dodd-Frank Wall Street Reform and Consumer Protect Act. The bill includes a provision opposed by NRF that would repeal the Federal Reserve’s cap on debit card swipe fees, and NRF will continue to work to have that provision removed from the measure.
Cybersecurity – With WikiLeaks hacks of Clinton emails and accusations that Trump encouraged Russia to engage in electronic espionage each having been a key part of the campaign, NRF will urge the Trump administration to take action on cybersecurity legislation. Among other steps, NRF wants to replace conflicting state laws on data breach notification with a uniform national standard that would apply to all entities that handle sensitive data, not just retailers. NRF is also concerned that the United States not adopt overly stringent data privacy laws in response to recent European measures that severely restrict how retailers handle information about customers. And credit card security mandates set by the Payment Card Industry Security Standards Council should not be adopted or used as an example of best practices under laws adopted by Congress or regulations being considered by the Federal Trade Commission.